China’s top-tier firms Jun He and Zhong Lun are in discussions about a possible merger, in a move that would create the largest firm by revenue in China.

Insiders said the firms had recently signed a confidentiality agreement about the merger, with talks reaching the due diligence stage.

Senior partners at both firms have been informed about the move and are currently holding discussions about the plans.

Opinion is divided in both firms about what benefits a tie-up would have. If the merger goes ahead, combined revenues would stand at RMB1.83bn (£180m). That would put it slightly ahead of King & Wood Mallesons China, which posted revenues of RMB1.8bn last year and Dacheng, where revenues were RMB1.6bn.

Combined Jun He and Zhong Lun would be home to around 400 partners and over 1,000 lawyers across eight cities in China and a number of overseas jurisdictions, including Hong Kong, Tokyo, New York, London and Silicon Valley.

Zhong Lun has embarked on a mass expansion plan, acquiring a 22-partner team from legacy Kaiwen, which has split from Beijing-based Grandway for the deal (25 March 2014).

Both firms have also held merger discussions with other elite Chinese firms, including Commerce & Finance. Jun He’s talks with Commerce & Finance broke down after series of lawsuits relating to the Sino-Forest case (12 December 2013).

Sensible move which will provide more resources for overseas expansion. Note that the revenues are artificially low due to the current exchange rate, the figure in sterling will rise significantly in the coming years as the RMB becomes a more normal currency.